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State Name: New Jersey
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State Name lower: new jersey
State Abbreviation: NJ
State Abbreviation Lower: nj

MND NewsWire features plain and simple interpretations of industry related data and events written in a manner that maintains the interest of random readers while still catering to the perspective of a housing market professional.

A large
northeast savings bank has been named in a consent order filed by the Consumer
Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) for
alleged redlining. Hudson City Savings
Bank, a federally-chartered savings association with 135 branches and assets of
$35.4 billion is accused of lending practices that denied residents in majority
Black and Hispanic neighborhoods in New York New Jersey, Connecticut, and
Pennsylvania fair access to mortgage loans.

The order
charges that Hudson City located branches and loan officers, selected mortgage
brokers, and marketed products to avoid and thereby discourage prospective
borrowers in minority communities. If approved
by the court, the order will require Hudson City to pay $25 million in direct
loan subsidies to qualified borrowers in the affected communities, $2.25
million in community programs and outreach, and a $5.5 million penalty. CFPB
says this would be the largest redlining settlement in history to provide such
direct subsidies.

"We
allege that Hudson City's redlining practices illegally cut off opportunities
for consumers in predominantly Black and Hispanic neighborhoods to get a
mortgage and achieve the dream of homeownership," said CFPB Director Richard
Cordray. "Without access to affordable credit, neighborhoods deteriorate in the
long shadow cast by unfair lending. Today's action seeks to remove the redline
by bringing more than $27 million in mortgage subsidies and outreach programs,
along with new bank branches to the communities who should have had access from
the beginning."

The
vast majority of the bank's mortgage loan applications, primarily for
single-family residences, are concentrated in three metropolitan statistical
areas; New York City-Long Island-northern New Jersey, Philadelphia-Camden-Wilmington,
and Bridgeport-Stamford-Norwalk Connecticut. In 2012, Hudson City generated
over 90 percent of its mortgage loan applications for properties within these
three areas.

CFPB
and DOJ charged specifically that Hudson City structured its business to avoid
and thereby discourage residents in majority-Black-and-Hispanic neighborhoods
from accessing mortgages. The DOJ also alleges that Hudson violated both the
Fair Housing Act and the Equal Credit Opportunity Act, engaging in illegal
redlining by offering unequal access to credit based on the race and ethnicity
of prospective borrowers' neighborhoods.

The consent order charges that:

From 2004 through 2010, the bank embarked on a branch expansion
in Staten Island, Long Island, areas north of New York City, and Connecticut. These are areas which exclude and form a
semi-circle around the four counties in New York with the highest proportions
of minority neighborhoods. Hudson City also placed all of its loan officers
outside of majority-Black-and-Hispanic areas.

The bank generated 80 percent of its mortgage applications
through mortgage brokers who were heavily concentrated outside of minority areas.
In 2011 and 2012, 94.5 percent of Hudson City's top 50 brokers' offices were
not in majority-Black-and-Hispanic areas.

The bank excluded
minority communities from its marketing strategy, advertising and offeringdiscounted
home improvement loans only to residents of certain counties. It excluded from eligibility the four New
York State counties with the highest proportions of majority-Black-and-Hispanic
neighborhoods.

It also excluded minority neighborhoods from its credit assessment
areas under the Community Reinvestment
Act. For example, Hudson City's
assessment area near Philadelphia and Camden excluded all 337
neighborhoods with a majority of Black and Hispanic residents.

Court
approval of the joint order will require that the bank:

Pay $25 million to a loan subsidy
program in majority Black and Hispanic neighborhoods to make mortgage loans
more affordable than those otherwise available from the bank. The loan subsidies can
include interest rate reductions, closing cost assistance, and down payment
assistance.

Spend $1,000,000 on targeted advertising and outreach over a five
year period to generate applications for mortgage loans from qualified residents in the
affected neighborhoods.

Spend $750,000 to partner with community-based or governmental organizations that
provide assistance to residents in Black and Hispanic neighborhoods.

Spend $500,000 over five years to provide financial educational
events covering credit
counseling, financial literacy, and other topics to help identify and
develop qualified loan applicants from the affected communities.

Open two new branches offering full-service banking in
majority-Black-and-Hispanic communities:

Complete an
assessment of the credit needs of the majority-Black-and-Hispanic
communities within the affected metropolitan areas:

Develop a fair lending compliance and training plan and train all of its employees
involved in mortgage lending to ensure their activities are
nondiscriminatory and hire a full-time Director of Community Development to
oversee and foster lending in Black and Hispanic neighborhoods.

Pay a $5.5 million penalty to the CFPB's Civil Penalty Fund.

"Hudson City Savings Bank
structured its business operations to systemically avoid providing credit
services in predominantly minority neighborhoods," said U.S. Attorney Paul J.
Fishman of the District of New Jersey. "There is no room for such behavior in our
banking system. In addition to paying $25 million for a loan subsidy program,
today's settlement agreement will require the bank to take a number of concrete
steps to ensure that they improve access to responsible and affordable credit
to qualified borrowers in Black and Hispanic neighborhoods."

The
complaint filed by CFPB and DOJ is not a finding or ruling that the defendants
have actually violated the law. The proposed federal court order will have
the full force of law only when signed by the presiding judge.

To the liberals who created the CFPB (Frank/Dodd), credit and income go hand in hand with race and ethnicity.
In one breath they'll proclaim lenders need to lend to groups of people who can't meet CFPB's own qualified mortgage requirements.
So they blast them for not lending to minorities and then blast the lenders for making these "high risk loans" - well, which is it??

Investors clammer for high yield. Banks make money from origination fees and the sale of the note. Both are greedy, wanting higher yields so they tell the Congress, banks own Congress so that is handy, to relax the rules in order to charge higher fees and rates. Bam! Everyone gets a house, for a while.

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